Dubai Real Estate Sector Expects Robust Expansion in 2014
DUBAI: Phenomenal recovery is expected in Dubai's real estate sector in year of 2014. Rating agencies have already forecast happy tidings for the emirate's prime property sector with a ‘strong 2014’ after the vibrant 2013 innings.
The impact of Dubai hosting World Expo 2020 is going to be felt on the real estate sector with more projects getting announced. Retail rentals and hospitality revenues are already showing healthy performance and gracing growth since 2011 foreboding another good year in 2014. The report added that residential prices and demand scenario are showing bright prospects as recoveries in prime locations in Dubai as well as in secondary locations with new projects are upbeat.
The sector's outlook for 2014 relies more on the power of real estate companies to sustain their positive performance despite the increasing supply and expansion taking place across all segments.
It is already on record that real estate prices in Dubai’s prime areas have shot up 30 percent in 2013 itself. The expectation is that the property sector will benefit from the enthusiasm of domestic, regional and international investors. The surging tourism sector and Dubai’s rising profile as an area of peace despite the turmoil in some parts of the Middle East is making it a preferred destination.
There is only a remote probability of instability in the Middle East escalating and the Gulf Cooperation Council (GCC) area getting affected to cast a negative impact on the sector.
Major real estate projects amounting to billions of dollars have been announced in Dubai putting pressure on the sector if they materialize in the short to medium term.
That Dubai has been confirmed as the venue of the World Expo 2020 is going to be a great boost to the real estate sector. There is also optimism on repaying and refinancing upcoming maturities in 2014 and 2015 and attracting more investment to the sector.
Impact of World Expo
Already there is serious investor-movement after Dubai won the Expo 2020. Rise in home rentals and increased demand for property sales in the vicinity of Expo 2020 as well as in suburban Dubai is rightly expected. There will be high demand for serviced apartments as a huge influx of business travelers are anticipated.
Among a slew of projects in the pipeline the Sheikh Mohammed Bin Rashid comprising 100 hotels and gardens larger than London’s Hyde Park is very significant. A man-made island is yet another reality marvel that may drive the prospects of Dubai’s lucrative real estate sector further.
Property prices across Dubai’s prime locations appreciated 30 percent in the various quarters of 2013. The signals are unmistakable and clear that the emirate is rebounding from the market crash of 2009 that broke the real estate prices by 65 percent. The bubble burst was also the result of over-speculation.
With a somewhat positive outlook of real estate sector backed by performance of top real estate companies in Dubai it is sure that many multi-billion mixed use projects will attain faster traction.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.